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Walgreens Pumps the Brakes on Theranos Partnership Amid Problematic Lab Audit After one of Theranos' labs was found to pose immediate jeopardy to patient safety, Walgreens has ordered that no blood tests be analyzed there.

By Geoff Weiss

Opinions expressed by Entrepreneur contributors are their own.

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Walgreens is pumping the brakes on its partnership with Theranos after an inspection by the Centers for Medicare and Medicaid Services (CMS), a federal health agency, revealed that the $9 billion blood test startup's Newark, Calif. lab location posed "immediate jeopardy to patient safety."

In a statement, Walgreens -- Theranos's first retail partner, which operates blood-testing centers in 40 locations throughout Arizona and one in Palo Alto, Calif. -- said that Theranos "must immediately cease sending any clinical laboratory tests…to the Theranos lab in Newark, Calif., for analysis. In addition, Walgreens is suspending Theranos laboratory services at its Palo Alto, Calif., store, effective immediately."

While the specific nature of the deficiencies at Theranos's Newark lab have not been disclosed, CMS said that the company's worst offense lay within the realm of hematology, or the study of blood. In a letter released yesterday by CMS, the organization said that Theranos's Newark lab "has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served."

Related: Theranos Poses 'Immediate Jeopardy' to Patient Health, Government Says

Of Walgreens' decision, Theranos's vice president of communications, Brooke Buchanan, told Entrepreneur that the company's "Arizona lab, which handles 90% of our wellness center lab tests, is not impacted by this week's findings." Therefore, she said, "We are open for business, confident in our technologies, and unwavering in our commitment to provide Arizonans with the care and service they deserve."

Buchanan added that CMS' findings "do not reflect the current state of the [Newark] lab," and said that, "This is an issue that many other labs have faced, and we will fix it quickly and completely, working with our regulators as we always do."

Theranos has 10 days to address the complaints before incurring penalties of $10,000 daily fees, onsite monitoring, the suspension of its CLIA certificate or the cancellation of its approval for Medicare payments.

Walgreens announced its partnership with Theranos in 2013, and the two eventually planned to open blood-testing centers within the chain's 8,200 locations across the country. Now, however, Walgreens is debating whether to shutter the 41 existing locations, according to The Wall Street Journal.

Geoff Weiss

Former Staff Writer

Geoff Weiss is a former staff writer at Entrepreneur.com.

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